Another Indian company bags second Nepal hydropower deal

By Sudeshna Sarkar Kathmandu, March 3 (IANS) Within two months of India’s GMR Group bagging a much-coveted hydropower deal in Nepal, another Indian company has now obtained rights to a second one despite protests by Maoists and NGOs. Indian public undertaking Sutlej Jal Vidyut Nigam, in which India’s Himachal Pradesh state government has a stake along with the federal government, has wrapped up the contract for the 402 MW Arun III project after negotiations that went on for almost three months.

Nepal’s water resources ministry said in a press statement that a memorandum of understanding was signed with the Indian company Sunday, authorising it to develop the project in five years and operate it for 30 years on a build-own-operate-transfer (BOOT) basis.

Sanjay Uppal, deputy general manager at Sutlej, signed the deal for which the Indian company has agreed to reimburse the money spent by Nepal for a feasibility study of the project, estimated to be over Nepali Rs.450 million ($7 million).

Sutlej, ranked the second-best bidder from among the several Indian companies that vied for the project last year, was able to shoot past the best contender, GMR, after Nepal’s lawmakers said that no bidder should be awarded more than one project simultaneously.

The Indian public undertaking managed to win the contract after promising to give power-starved Nepal nearly 22 percent free energy.

In addition, it will have to present a bank guarantee of Rs.500,000 per unit for the power generating licence and Rs.100,000 per unit to obtain a survey licence.

The Indian company will also have to build an access road and install transmission lines as well as carry out an environmental impact assessment.

Sutlej becomes the second Indian company to enter Nepal’s thorny hydropower sector after the formation of the Girija Prasad Koirala government in 2006.

In the past, other Indian entities, including private and public sector undertakings, failed to make any headway despite initial agreements due to the suspicion by political parties that the bigger southern neighbour was out to exploit Nepal’s water resources.

The ice was broken by GMR late last year after it won the 300 MW Upper Karnali project, for which it has pledged free 12 percent energy and 27 percent free share.

However, the signing of the MoUs doesn’t signify an end to the opposition to Indian entries.

The Maoists, who claim they will win the April election and come to power, are against the two deals, alleging they were struck on the behest of the prime minister, who declined to consult the ruling parties on the issue.

There have been rallies in the capital condemning the Karnali “sell-out” and last fortnight, two Nepali individuals filed a public interest litigation in Supreme Court, challenging the Upper Karnali deal.